Image source: GoPro.

What: Shares of action camera maker GoPro (NASDAQ:GPRO) rose 16.9% in July, according to data provided by S&P Global Market Intelligence. Much of the gain can be attributed to GoPro's second-quarter results. While the company reported a steep decline in revenue and a significant loss, its guidance for the full year outpaced analyst expectations.

So what: GoPro reported second-quarter revenue of $220.8 million, down 47.4% year over year. A high level of channel inventory has been one driver of GoPro's revenue declines in recent quarters, and the company announced some progress in that area. Unit sell-through was more than 50% higher than sell-in during the quarter, leading to a 35% sequential reduction in channel inventory.

Non-GAAP EPS came in at a loss of $0.52, down from a profit of $0.35 during the prior-year period. Lower revenue, a drop in gross margin, and substantially higher operating costs drove down profitability.

GoPro CEO Nicholas Woodman talked up big product launches slated for the second half:

GoPro is well-positioned for the second half of the year. We now have a simple product line, a clean retail channel and clear indications of strong consumer demand. HERO5 and Karma will contribute to the largest introduction of products in our history, all in time for what we believe will be GoPro's most exciting fourth quarter, ever -- a quarter where we expect to return to profitability.

Despite the steep decline in revenue, GoPro still expects to produce $1.35 billion to $1.5 billion of revenue during 2016. Analysts were expecting revenue guidance of just $1.34 billion.

Now what: While GoPro's second quarter was awful, the company's outlook for the rest of the year is likely responsible for pushing the stock higher. GoPro expects to return to profitability during the fourth quarter, driven by new product launches.

Given the company's outlook, investors are now a bit more confident in GoPro's turnaround. But there's no guarantee that GoPro's new products will be a hit, particularly the Karma drone, which will see the company enter into a new market. GoPro's guidance is built on the assumption that these products will be successful, but after the Hero4 Session debacle of 2015, investors should take GoPro's guidance with a grain of salt.

Editor's note: an earlier version of this article stated GoPro reported second-quarter revenue of $220.8 billion. The article has been updated to correct this mistake. 

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